Retiring to Travel, the First Key: Erasing Reoccurring Debt Payment

Key One for retiring to travel: Have no reoccurring debt payments. None, nada, zip. Don’t owe nothing at all, not even a storage space for stuff you “might” need someday if you quit traveling.

Hi from Catemaco, Mexico.

So, assuming you have figured out a way to get rid of all that stuff accumulated over the years AND you have a cash cushion AND you have some form of recurring, reliable cash flow (social security, company retirement, interest payments, or a combination of these) the next thing to do before hitting the road is pay off all debts. If you are one of the lucky few that have already done this, congratulations. If you aren’t one of these then welcome to “the hard part” of getting ready for your traveling retirement.

If you have some money stashed away, be cautious of spending it to pay off debt. Remember, some cash cushion is needed for medical and other emergencies that could arise when traveling. For instance, in the last few weeks I had to dip into my cash reserves to pay for a ticket change from Australia to the US and then from the US to Mexico. This came about because of a medical emergency in my family, and I had to get back fast. Changing the date on an airline tickets is not cheap. Changing both of them cost over $1100 USD. That is about two-thirds of my monthly cash flow. As a result, I will be sitting still here in Catemaco until I have renewed my cash cushion. How long that will take depends on how cheaply I live while I am here. Right now, I am doing pretty good. I rented a casita (small house) for $150 a month USD and all the utilities are included (I love Mexico).

But if you do need a loan, that is another way to cover some emergency expenses. Some loans are tough to get without good credit but this is not always the case. For example, by researching the easiest loan to get with bad credit, you will be able to find providers who will overlook your bad credit and instead be willing to help you get out of a financially difficult situation.

I’m not saying you can’t use your cash cushion to pay off debts. If I had a choice between having a cash cushion and having debts, I would use the cash to pay off the debt. Is this good financial sense? I dunno. What I do know is debt is too heavy a weight for me to carry in my backpack. If you can shoulder it, you have my admiration.

Alternatives to using your cash cushion to pay off debt is to use the proceeds from selling off your furniture, your automobiles, and your house. Fortunately, in my situation, I eliminated all my outstanding debt years ago so I used the money from the sale of these “belongings” (I belonged to them – they didn’t belong to me) to build up my cash cushion.

Another alternative is to work until all your debt is paid. I hate that concept. After all, we are supposed to be retired, not working at McDonalds. Remember though, this will only be a temporary condition, not a permanent sojourn in hell. I know jobs are hard to come by in the states now but there is always something for someone to do if they are willing to work. It might even be possible to brush up on ex-job skills to make some money the same way you always did before retirement.

Yet one more alternative is to cut your living expenses and use the difference to pay off debt. Remember, by selling all the stuff and the house, you will no longer be paying property taxes or upkeep or insurance on those things. This is money that can go directly to debt payment if you can manage to live cheaply enough while doing so. Get public housing if possible. Get cheap housing with utilities paid if public housing is not an option.

One place where you don’t want to cut corners is health insurance. Not yet. Not while you are still in the US. One trip to the emergency room there can set you back months – possibly even years — of debt. We don’t have time for that so err on the safe side for now. For getting rid of the cost of health insurance, wait until you are in a “cheaper country.” Which brings us to:

Key Two: Spend a lot of time in “less expensive” countries – like Mexico, Central America, and most of South America – and very little time in “more expensive” countries – like Europe, Australia, and the USA. For this discussion, see next week’s installment. Until then, “Una mas cerveza, por favor.”

— Gar, the Senior Vagabond

Read the other articles in the Senior Vagabond series series.